New forecasts from the National Institute of Economic and Social Research (NIESR) estimate that the economy contracted 1.5pc between January and March. If the think-tank is correct, it would mean the recession remained as severe in the first three months of the year as it was in the final quarter of 2008, when gross domestic product fell 1.6pc.

The gloomy figures reinforced fears that gross domestic product data due to be published by the ONS on April 24 will show that the recession showed no sign of easing in the first quarter.

NIESR added that so far the fall in output has taken a similar path to the recession which began in the summer of 1979. “If the 1980s profile were followed, output would continue to decline for up to another year and it would take two further years before the level of output enjoyed at the start of 2008 would be reached again,” it said.

Figures yesterday showed British manufacturing sector shrank the most since records began in 1968 in the three months to February, dragged down by a dwindling car industry.

Data out on Tuesday showed that output fell by 6.5pc over the period, as conditions for UK manufacturers worsened in the grip of recession. The worst affected area was car manufacturing, where output fell by 30.7pc according to figures from the Office for National Statistics.

Overall the manufacturing sector shrank by 12.2pc compared with the same three months a year ago.

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